Pages

Tuesday, September 29, 2015

4 Ways to Make the Most of Your Home Loan

Now that your decision to apply for a home loan is final, it’s best to find the many different ways you can turn this debt to good use. Laying out the budget for the amount you borrowed is only the first step. You must also consider the following factors that can help you make the most of your home loan:

1. Determine the Amount You Need to Borrow

Planning how much you need to borrow for your home is the first thing you need to consider. Lay out your budget plan. What’s your purpose for the home loan? Do you want to buy a condominium, house and lot, or build your dream home? Through this, you’re able to calculate the total costs of getting a house. Take into consideration your gross monthly income, or if you’re married, add your other half’s total monthly income. This way you’ll be able to see how much you’re going to set aside for the monthly amortization.

2. Look Outside the Top 4 Banks

Sure, the leading banks are the most popular and most trusted when it comes to loans, but know that there are other banks out there who are just as reliable, and can even offer much lower interest rates and fees than the top 4 leading banks. Shop around for the best loan deals, call the banks if need be, so you know who has the most competitive rates and terms. The interest rates posted on the bank’s websites are not necessarily accurate so take the time to talk to your chosen banks’ loan processors in order get a clearer view of their loan package.

3. Know the Bank Rates and Charges

When you’re done with the list of banks you want to apply for, take a look at their fees, interest rates, and payment terms. Use the bank’s home loan calculator. Most banks provide loan calculators on their websites so you can see the loan amount you can borrow by entering your gross monthly salary and intended loan amount. After you enter the necessary details, you’ll be able to see how much you’re going to pay on a monthly basis according to the loan term you chose. Most banks offer loan terms of up to twenty (20) years. It’s best to pay your loans right away to avoid paying bigger interests. Besides, if you can afford to pay bigger monthly amortizations through your income, it’s only apt that you pay the bank in the shortest possible time. This is not only convenient on your part, but you’ll also earn good credit record with the bank that granted you the loan.

4. Consider Future Savings

Lastly, in order to make the most of your home loan, consider the advantages that your home loan will bring. Find a house that’s closer to your office or business location so you save time, gas, or money whenever you go to work. If you’re only starting out with your other half, consider building a smaller home first, one that’s enough for the loan amount you want to borrow. You can always start the home expansion when you have enough money in the future. If you want to buy a condominium to have it rented out, consider areas that are close to the Central Business Districts or universities. It may cost more, but you’re less likely to run out of tenants because of the ideal location.

Being extra prepared is always the best way to turn that loan to your advantage. As the adage goes, the devil is in the details. Miss one important factor on your plans and you can end up regretting to pay huge interest rates over a long period of time. Do your own research and think it through with your friends, family, or with the banks of your choice. You’re eventually going to reap the rewards of being extra careful, especially when it comes to important decisions such as your commitment to pay for a long term home loan.